[EconTalk] Jacob Vigdor on the Seattle Minimum Wage

Jacob Vigdor on the Seattle Minimum Wage

04/03/2019 by EconTalk: Russ Roberts

Web player: http://podplayer.net/?id=64769593
Episode: http://files.libertyfund.org/econtalk/y2019/Vigdorminimumwage.mp3

Jacob Vigdor of the University of Washington talks with EconTalk host Russ Roberts about the impact of Seattle’s minimum wage increases in recent years. Vigdor along with others from the Evans School of Public Policy and Governance have tried to measure the change in employment, hours worked, and wages for low-skilled workers in Seattle. He summarizes those results here arguing that while some workers earned higher wages, some or all of the gains were offset by reductions in hours worked and a reduction in the rate of job creation especially for low-skilled workers.

Listen Date: 2019-04-29

Notes:

  • The discussion of methods was extremely interesting; especially the discovery that wages in Seattle’s exurbs were more likely to move in step with downtown Seattle’s than Seattle’s inner suburbs were. I couldn’t help but speculate on what made it so – Seattle’s direct suburbs being complementary markets, etc – though that is not something Vigdor ever raised.
  • The main learning: raising the minimum wage keeps hours of employment roughly constant, but reduces openings for people with barely any experience and starts eliminating some very unskilled positions – and therefore Seattle will see full service restaurants be marginally replaced by “collect at the counter” restaurants.
  • Vigdor cheerfully pointed out that this replacement will spread even into markets where there is a lower minimum wage.
  • That ties in with the persistent gloom on Reddit and American Twitter about no jobs for the experience-less. Though it does smack down their crying about no living wage as well.
  • The other important point about the inputs rather than the conclusions was Vigdor saying that his data set is so much better because he gets to look at hours of work and not just total headcount.
  • And it was nice of Vigdor to point out the types of work that he would undercount: self-employment, being paid off the books, working on contract.
  • Unrelated to the main topic, but it presented the fascinating insight that Seattle and San Francisco have the smallest proportion of teenagers in the USA. Because families which need multiple bedroom houses are priced out of the real estate market?
  • Hearing about the CEO of the Restaurant Association say that restaurants could lay off vegetable prep line cooks and just buy the vegetables pre cut from areas without / with a lower minimum wage.
  • The discussion of the Starbucks app as a labour reduction technology was amazing.

 

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